Do Minorities Pay More for Mortgages?
44 Pages Posted: 19 Apr 2019 Last revised: 22 Jun 2020
Neil Bhutta
Federal Reserve Bank of Philadelphia
Aurel Hizmo
Board of Governors of the Federal Reserve System
Date Written: October 24, 2019
Abstract
We test for racial discrimination in the prices charged by mortgage lenders. We construct a unique dataset where we observe all three dimensions of a mortgage’s price: the interest rate, discount points, and fees. While we find statistically significant gaps by race and ethnicity in interest rates, these gaps are offset by differences in discount points. We trace out point-rate schedules and show that minorities and whites face identical schedules, but sort to different locations on the schedule. Such sorting may reflect systematic differences in liquidity or preferences. Finally, we find no differences in total fees by race or ethnicity.
Keywords: Discrimination, Fair Lending, Mortgage, Points, Interest Rate, FHA, Consumer Protection, High-Cost Mortgage
JEL Classification: G21, G28, R51
Suggested Citation: Suggested Citation
Neil Bhutta (Contact Author)

Federal Reserve Bank of Philadelphia ( email )
10 Independence Mall
Philadelphia, PA 19106
United States
Aurel Hizmo

Board of Governors of the Federal Reserve System ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
Do you have a job opening that you would like to promote on SSRN?
Related eJournals
-
Banking & Insurance eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,777PAPERS30,592This Journal is curated by:René M. Stulz at Ohio State University (OSU) - Department of Finance -
Regulation of Financial Institutions eJournal
Regulation of Financial Institutions eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,707PAPERS11,100This Journal is curated by:René M. Stulz at Ohio State University (OSU) - Department of Finance -
Corporate Law: Law & Finance eJournal
Corporate Law: Law & Finance eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,353PAPERS6,376This Journal is curated by:Bernard S. Black at Northwestern University - Pritzker School of Law -
Discrimination, Law & Justice eJournal
Discrimination, Law & Justice eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,240PAPERS17,588This Journal is curated by:Francisco Valdes at University of Miami - School of Law -
Real Estate eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,193PAPERS9,588This Journal is curated by:Dennis R. Capozza at Ross School of Business, University of Michigan, William N. Goetzmann at Yale School of Management - International Center for Finance -
Regulation of Financial Institutions eJournal
Regulation of Financial Institutions eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,139PAPERS10,683This Journal is curated by:Howell E. Jackson at Harvard Law School -
Law & Society: Private Law - Discrimination Law eJournal
Law & Society: Private Law - Discrimination Law eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS765PAPERS3,981This Journal is curated by:Deborah A. Widiss at Indiana University Maurer School of Law -
Urban Economics & Regional Studies eJournal
Urban Economics & Regional Studies eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS735PAPERS21,558 -
Cultural Anthropology eJournal
Cultural Anthropology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS633PAPERS38,922 -
Economic Anthropology eJournal
Economic Anthropology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS614PAPERS8,781 -
Econometric Modeling: Microeconometric Studies of Health, Education, & Housing Markets eJournal
Econometric Modeling: Microeconometric Studies of Health, Education, & Housing Markets eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS609PAPERS6,654 -
Race & Social Inequity eJournal
Race & Social Inequity eJournal
Subscribe to this free journal for more curated articles on this topic
FOLLOWERS427PAPERS2,730 -
Consumer Law eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS392PAPERS9,279This Journal is curated by:Jeff Sovern at University of Maryland Francis King Carey School of Law -
Financial Literacy eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS366PAPERS1,461This Journal is curated by:Annamaria Lusardi at Stanford University - Stanford Institute for Economic Policy Research -
Household Financial Planning eJournal
Household Financial Planning eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS182PAPERS1,968 -
Decision-Making in Economics eJournal
Decision-Making in Economics eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS175PAPERS6,645 -
Human Behavior & Game Theory eJournal
Human Behavior & Game Theory eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS145PAPERS4,527